SOC 2 or ISO 27001? A Guide for Fintechs and SaaS Companies Selling to US Banks

If you sell software or technology services to banks, credit unions or other financial institutions in the United States, sooner or later a vendor risk questionnaire arrives, often with a simple question near the top: can you share your SOC 2 report? For many Indian fintech and SaaS companies, this is the first serious security requirement they meet. This guide explains the two most common answers, SOC 2 and ISO/IEC 27001, and how to choose.

Why US banks ask

US banking regulators expect banks to manage the risks of their third-party relationships. The federal banking agencies (the Federal Reserve, FDIC and OCC) issued joint Interagency Guidance on Third-Party Relationships: Risk Management in June 2023, covering due diligence, contracts and ongoing monitoring of vendors. Institutions regulated by the New York Department of Financial Services must also meet the third-party service provider requirements of 23 NYCRR Part 500. A vendor's independent security report is one of the most efficient ways for a bank to evidence its due diligence.

SOC 2 in brief

• What it is: an attestation report by an independent CPA firm under AICPA standards, on controls relevant to the Trust Services Criteria: security (always included), and optionally availability, processing integrity, confidentiality and privacy.
• Type 1 vs Type 2: Type 1 reports on the design of controls at a point in time; Type 2 reports on whether controls operated effectively over a period, commonly three to twelve months. Banks generally want Type 2.
• What the buyer receives: a detailed report, usually shared under NDA, describing your system, your controls and the auditor's tests and results.

ISO/IEC 27001 in brief

• What it is: an international standard for an information security management system (ISMS). Certification is granted by an accredited certification body.
• Current version: ISO/IEC 27001:2022, whose Annex A lists 93 reference controls in four themes: organisational, people, physical and technological. Certificates to the older 2013 version had to transition by October 2025.
• What the buyer receives: a certificate stating the scope, usually with the Statement of Applicability on request.

Side by side

Which should you choose?

• Selling mainly to US banks and US SaaS customers? Start with SOC 2 Type 2.
• Selling to global enterprises, government or through tenders? ISO/IEC 27001 is often listed explicitly.
• Both markets? Build one control set mapped to both. The overlap is large: access control, change management, logging, vendor management, incident response, business continuity and risk assessment appear in both.

What vendor risk teams look at beyond the report

• A recent penetration test with retest evidence.
• How you protect their data: encryption, access, segregation between customers.
• Incident notification commitments in the contract.
• Business continuity and disaster recovery testing.
• Your own sub-processors and where data is stored.

How to prepare efficiently

1. Define the scope: the product, infrastructure, people and vendors involved.
2. Run a gap assessment against the Trust Services Criteria and Annex A together.
3. Fix gaps, starting with access control, logging and change management.
4. Collect evidence as controls run, not just before the audit.
5. Choose the auditor or certification body and plan the observation period.

VD Hosts provides SOC 2 readiness support and ISO 27001 readiness support, and the penetration testing buyers ask for. We do not issue SOC 2 reports or certificates; independent auditors do.